Addressing threats to health care's core values, especially those stemming from concentration and abuse of power. Advocating for accountability, integrity, transparency, honesty and ethics in leadership and governance of health care.

Wednesday, December 28, 2011

Legal Settlements Have Become So Common that They are Barely News

Legal settlements by big health care organizations have become so common that those of less than blockbuster size barely seem to qualify as news. They have become "dog bites man" stories. For example, the following stories barely got noticed in the media (presented chronologically).

Novartis Settles Price Misrepresentation Suit for $150 Million

This story was mentioned as an aside in a a news story covering a settlement by Watson Pharmaceuticals in September. In slightly more detail, it has only appeared in PharmaLot in November. In a very small nutshell,

the Sandoz unit of Novartis earlier this week agreed to pay $150 million to settle lawsuits filed by the states of Florida and California, as well as a whistleblower, to settle charges that it deliberately misreported pricing information in order to hike reimbursements from Medicaid.

By the way, per the settlement document, the allegations were that Novartis' subsidiary knowingly maintained, set or reported "false, fraudulent, and/or inflated Reported Prices," yet, as is typical of nearly all settlements, the settlement "shall not constitute or be construed as an admission of fault, liability, or unlawful conduct."

Genentech Inc. will pay $20 million to settle a whistleblower lawsuit around off-label marketing of the cancer-fighting drug Rituxan.

It only took eight years since a whistle-blower raised the issue:

John Underwood, ... was a senior manager of sales development from the start of Genentech’s oncology franchise in 1997.

When Underwood filed the suit in July 2003 in U.S. District Court for the Eastern District of Pennsylvania, he was a senior hospital systems specialist for Genentech.

This suit is actually of particular interest because it was not just about off-label promotion,

Genentech, the suit claimed, retained doctors to act as independent speakers on behalf of Rituxan and its off-label uses, paid kickbacks to doctors that were disguised as consulting payments, 'exerted significant pressure' on sales reps to increase off-label uses of Rituxan, and devised and conducted 'selling skills workshops' for sales reps devoted to non-label uses,

What’s more, the suit claimed, Genentech invited doctors to attend “medical education seminars” at 'luxurious locations' and gave financial incentives to sales reps to get doctors who sold the most Rituxan to attend the events.

These were serious allegations, involving allegedly direct efforts by the company to subvert physicians' ethics by tying their decisions for individual patients to payments for prescribing specific products whatever the benefits and risks of those products for those patients. The allegations suggested that "consulting payments" to physicians may be nothing more than disguised bribes, and that the companies making these payments may be quite conscious of this.

Nonetheless, as usual,

Genentech, the South San Francisco-based U.S. subsidiary of Swiss drug giant Roche, did not admit wrongdoing....

So, as in the famous recent Citigroup case (see this post), the settlement obfuscates the crucial question, did the corporation involved commit illegal acts? It seems likely that what they did was in some sense unethical, since they were willing to pay millions not make the matter go away.

Pharmacy and prescription drug management company CVS Caremark Corp. has agreed to pay nearly $20 million to settle three lawsuits involving allegations that the company defrauded pension systems in three states, including California’s giant pension fund, attorneys said.

The whistleblower lawsuits, filed by two former CVS Caremark pharmacists, accused the company of reselling returned drugs, changing prescription orders to make them more expensive and submitting false reports about how long it took to fill prescriptions.

Not the least bit surprisingly, the company did not admit liability in the settlement, and had no comment for the Times. Ho, hum, another big company paying millions to make allegations of fraud go away... nothing to see here, so we will just move on.

Merck Settles Fraud Suit for $24 Million

This story was picked up by AP, so a very brief version of it did appear in a variety of locations. A longer version was published by the Boston Globe,

At this point, it should be no surprise that it took a long time to get to this settlement, eight years in fact, just as in the case above,

Merck & Co. has agreed to pay $24 million to the state Medicaid program to settle long-running civil charges that it charged too much for some drugs, in the largest single-case Medicaid fraud settlement in Massachusetts history.

The agreement, unveiled yesterday by Attorney General Martha Coakley’s office, closes out a 2003 lawsuit....

Again, "hold accountable" did not translate into establish the allegations as true,

Ron Rogers, a spokesman at Merck corporate headquarters, said the drug company did not admit liability or wrongdoing in the settlement. He said Merck agreed to resolve the claims to put the matter behind it.

Nothing more to see here, so we will move on again.Summary

Every month, it seems that more settlements are announced of cases alleging all sorts of wrongdoing by major health care organizations. Very often, the allegations are of wrongdoing that appears serious to the uninitiated. For example, most of the above cases involved allegations of fraud, and one involved allegations of kickbacks, that is, bribes to doctors.

Yet, in every one of these cases -
- The monetary penalties were barely more than pocket change for the corporations involved.
- The payments were made by the organization as a whole, and hence would disadvantage many people who were not involved in and did not benefit from the specific actions alleged. Such de facto victims of the settlement included company shareholders, employees, and probably patients (who may have paid prices raised to pay for settlements), and the public (who may have indirectly paid these higher prices through insurance premiums or taxes.)
- The organization did not have to admit any facts, leaving the record foggy, and clouding the chances for any people who might have been hurt by the actions to take legal action.
- No people who actually authorized, directed, or implemented the apparent bad behavior suffered any negative consequences.

Thus, these settlements, like many others we have discussed, did not appear to be any major deterrent of future bad behavior.

These settlements do provide a public, if largely ignored, record that suggests how a miasma of sleazy behavior, if not outright corruption has settled over health care. These settlements do provide the context for many pithy questions that could be asked of health care organizational leaders, if anyone dared to do so. The settlements do suggest a need for wholesale, real health care reform that would make health care leaders accountable for what their organizations do, particularly when these organizations misbehave.

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